President Clinton announced this week a modest package of proposals to
reduce the impact of skyrocketing oil prices, which last week, after nine
straight weeks of increases, hit a new record of $1.57, fifty cents more
than a year ago. Prices could rise to $1.74 to $1.80 per gallon by summer.

The President primarily favors using "quiet diplomacy" to coax
OPEC to increase supply, but he also suggested tax incentives to spur conservation
and alternative fuels and agreed to modest tax breaks to increase domestic
production.

Meanwhile, Congress is examining several options, among them a repeal
of the 4.3¢ gas tax increase approved as part of the 1993 Clinton deficit
reduction plan and ending the ban on drilling in Alaska's oil-rich Arctic
National Wildlife Refuge.

House Majority Leader Dick Armey (R-TX) believes repealing the 4.3¢
gas tax would provide insufficient relief. Armey, who faces formidable opposition
to the tax repeal from House Transportation and Ways and Means Committee
Chairmen Bud Shuster (R-PA) and Bill Archer (R-TX), believes even more needs
to be done.

Armey's office says the U.S. relies on foreign imports for 56 percent
of our crude oil, an increase of 21 percentage points since the 1973 Arab
oil embargo, and predicts we will depend on imports for 65 percent of our
oil by 2020.

Armey has harsh words about Clinton's energy policy, calling it a "total
failure of leadership... a tax and regulatory policy failure... a foreign
policy failure... a domestic energy policy failure."

The federal government often has endorsed environmentalist causes over
cheap and plentiful energy. The Clinton Administration has closed huge areas
to oil and gas development. Interior Secretary Bruce Babbitt supports tearing
down hydropower dams. In 1996 Clinton ended mining access to 62 billion
tons of environmentally-friendly low-sulfur coal when he secretly established
the Grand Staircase-Escalante National Monument in Utah. In 1990 the federal
government mandated the addition of MTBE to gasoline. MTBE increases gas
prices about ten cents and is now known to pose a risk to the water supply.
The Clinton Administration signed the Kyoto Protocol, which would require
the U.S. to cut energy use so dramatically it could double gas prices.

When it comes to cheap and plentiful energy, clearly, government policies
sometimes do harm.

This is the message of the libertarian Cato Institute, whose natural
resource studies director, Jerry Taylor, states: "The best energy policy
is no energy policy."

Taylor says begging OPEC to increase production is "at best a waste
of time" because OPEC has no incentive to care about global recession
if profits are high.

"After all," he says, "in the 1950s and 1960s we built
the interstate highway system with a maximum federal gas tax of just four
cents a gallon. Maintenance of these roads shouldn't cost 18¢ per gallon."

The National Taxpayer's Union agrees, noting that state and federal gas
taxes combined rose by more than half, from 27¢ to 43¢, from 1990-99.

One government policy that almost certainly should be reversed is the
federal ban on oil recovery in Alaska's Arctic National Wildlife Refuge
(ANWR). ANWR is so oil-rich it could replace 30 years of Saudi oil imports.
Oil drilling equipment would cover only 2,000 of ANWR's 19 million acres,
and wildlife would be unaffected.

In developing an energy policy that works well for consumers we must
first heed the maxim: First, do no harm.

by Amy Ridenour

Gasoline Tax Increases by Year

1932 1¢ Revenue Act

1951 1¢ Revenue Act

1956 1¢ Federal Aid Highway Act

1959 1¢ Federal Aid Highway Act

1982 5¢ Surface Transportation Assistance Act

1986 .1¢ Superfund

1990 5¢ Omnibus Budget Reconciliation Act

1993 4.3¢ Omnibus Budget Reconciliation Act

Year 2000 Total: 18.4¢ per gallon

Nothing written here should be construed as an attempt
to help or hinder legislation before the U.S. Congress. Reprints of material
in Budget Watch is permitted provided that original source is credited.
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